Affordable Rental Housing in Rural Texas

Minnesota

Like Texas, Minnesota relies substantially on the Section 515 program to house low-income rural residents. In fact, the first property ever to use a Section 515 loan was developed in Grove City, Minnesota, in 1964.[19] Today, Minnesota ranks third, just after Texas, in terms of properties eligible for prepayment through 2050 with 223. Preservation, therefore, is critical to protect rural residents in the state.

Fortunately, a multisector collaborative effort exists. The Greater Minnesota Interagency Stabilization Group (ISG), created two decades ago, boasts membership from government and nonprofit housing entities including USDA RD, the U.S. Department of Housing and Urban Development, the Federal Home Loan Bank of Des Moines and the Minnesota chapter of the National Association of Housing and Redevelopment Officials.

The group meets every two months to discuss the current inventory of subsidized rural housing, including Section 515, and strategize about how to preserve properties. Oftentimes, a property owner or a funder approaches the group to solicit guidance in stabilizing units. ISG members vet the request to establish whether a property is a strong candidate—for instance, if it is “in a strong market with relatively high rents but receives rental assistance to help offset the amount a low-income tenant must pay.”[20] The ISG then will advise the owner or potential new buyer on funding options.

Part of the strength of this model is in the collaboration across housing agencies and organizations. In particular, members have successfully streamlined funding applications. In 1994, the ISG created a common “request for proposals” for developers to submit when applying for tax credits or other financing, which not only reduces time and red tape, but also requires that the funders prioritize collaboratively.

Finally, in instances where preservation does not work out, the group works with partners across the state to gather information on local resources that can help the tenants of the existing property. Resources such as Section 8, a voucher program that allows low-income families to pay for housing within their budgets, can provide tenants with alternative forms of affordable housing.

Indiana

Indiana is first in the nation in terms of the number of properties eligible for prepayment with 253. The state has been proactive in tackling its expiring Section 515 mortgage problem. The Moving Forward initiative is a partnership between the Indiana Housing and Community Development Authority (IHCDA) and Energy Systems Network to provide energy-efficient housing for low-income families.[21]

For 2019, Moving Forward’s goal is to preserve at least 30 USDA RD properties that are at risk of losing affordability by 2020. To achieve this, the IHDCA is setting aside 10 percent of its annual rental housing tax credits for projects that advance its mission, regardless of other evaluation criteria.

Moving Forward selected three developers from a pool of applicants to attend a series of rural development workshops and connect them to potential financial resources to preserve Section 515 housing, including the set-aside credits. Each developer will create a plan to group at least 10 of the state’s 472 properties into one portfolio to manage.[22]